Market News & Analysis

Top Story

NZ CPI overshadowed by Coronavirus

The better tone evident in the U.S. session following a decision by the World Health Organisation to refrain from classifying the Coronavirus as a global health crisis has mostly remained in place during the Asian time zone, despite more deaths being reported this morning.

The latest numbers are 830 confirmed cases, 680 suspected cases, and 25 deaths. 7 more cities have been placed under a transportation lockdown in addition to Wuhan, affecting a total population of over 23 million people, only 1.6 million less than the entire population of Australia!!!

While the number of fatalities represents a 38% increase overnight, traders anxieties are being assuaged by regular updates from Chinese authorities and the advice that despite human to human transition, most fatalities have involved the elderly or those with existing health conditions.

In terms of economic data, the highlight today has been the NZ Q4 headline inflation coming in slightly above expectations at 0.5% q/q and notably higher than the RBNZ’s November MPS forecast of 0.2% q/q.

The annual rate of inflation at 1.9% is now only fractionally below the RBNZs inflation target, and in tandem with the recent improvement in activity and sentiment data, as well as upcoming fiscal stimulus it affords the RBNZ more time to be patient. In response, most analysts have either pushed back or removed entirely their forecasts for RBNZ interest rate cuts in 2020.

Similar to the price action in the AUDUSD post the Australian labour force report, the NZDUSD initially rallied before buyer enthusiasm waned ahead of an unpredictable weekend. 

Technically, my bias is the NZDUSD will trade higher in due course. However, in the short term it is possible the current Wave iv correction may continue a little longer and lower before the uptrend returns.

Should the NZDUSD trade towards the band of support .6530/10 consisting of the 200-day moving average and uptrend support it would offer an appropriate location to assess a long NZDUSD entry looking for a retest of the December .6755 high.

Source Tradingview. The figures stated areas of the 24th of January 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.